Decision time for the EU on emissions tax

Two years ago, when the EU attempted to impose an emissions tax on the full length of flights to and from Europe, it met with massive outrage from other countries, to the point that China froze the purchase of almost thirty aircraft ordered from Airbus. In late 2012, bowing to pressure from the aerospace industry, and from the governments of many of its member countries, the European Commission removed international aviation from its Emissions Trading Scheme. To save face, the Commission said the exemption was only a temporary “stop the clock” move, giving ICAO a one-year deadline to implement a market-based emissions tax mechanism on a global scale.

That year has come and gone, and the EU’s emissions tax dilemma has been put back on the front burner by the Environment Committee of the European Parliament, which voted last week to reject an agreement that would exempt long-haul flights from paying for carbon emissions through 2016. The agreement was a compromise that would have extended the temporary exemption for three more years. Much longer than the one year that European Union’s Commissioner for Climate Action, Connie Hedegaard had originally called for, but a lot shorter than the seven-year exemption (through 2020) that many had called for.

The Committee’s rejection carries no legal weight and a final decision will be made in a full vote of the Parliament on 3 April. While the Environmental Committee will be pushing Parliament to reject the agreement, business and political leaders will likely be pushing just as hard for approval. To understand why, one need look no further than Chinese President Xi Jinping’s European visit over the next two weeks. Among Mr. Xi’s other goals will be negotiating a deal to buy at least 150 Airbus jets, and possibly unfreezing the purchase of the 27 A330s blocked during the previous row will also be on his agenda.